Microsoft

Microsoft was founded in 1975 by Bill Gates and Paul Allen. Microsoft has a corporate history of disinformation going back to its very inception. The success of its first product, a version of BASIC for the MITS Altair, was a fortuitous fluke provided by MITS itself, since neither founder had access to an Altair, or had written a line of code, at the time they contacted MITS to pitch their product.

In the 28 years since its inception, Microsoft has established itself in the computer industry as the "world's largest software maker". It holds recognized monopoly control over the desktop computer operating-system market and has extended itself on several occasions to attempt to become dominant, or monopolistic, in such arenas as Web browsers.

Intellectual property
In February 2008, Microsoft released a study (PDF) it had funded on students' attitudes to intellectual property rights. "Education is the key to stemming illegal downloads of music and other content," it concluded. "Teenagers are less likely to illegally download digital content when they are familiar with copyright laws." Weber Shandwick, one of the Microsoft's three PR firms, promoted the study.

Microsoft's Sheri Erickson said the study means schools can "prepare students to be good online citizens." But rather than wait for schools to consider the issue and their role in it, Microsoft hired a "curriculum consulting firm, Topics Education, to develop a pilot program for copying education in middle and high schools." The company also set up two websites: one that asks teachers to "participate in a Field Test of this brand-new curriculum" and one that asks students to "mix, publish and share" cell phone ring tones created using the site -- after assigning intellectual property usage rights to them.

Matt Asay criticized the Microsoft IP curriculum on a CNET News blog. "The one thing [Microsoft] didn't explain to teens is why they should retrofit 20th-century copyright laws onto 21st-century realities," he wrote. "Digitization is a fact. The web is a fact. Intellectual property is not the same as real, tangible property, and should be treated and monetized differently."

In 2006, Microsoft CEO Steve Ballmer accused the Linux open-source operating system of infringing on Microsoft's intellectual property.

In Autumn 2006, Microsoft lawyers argued against the European Court's anti-trust ruling against the company. They claimed the court's order "to disclose technical details to rival makers of software for computer servers to allow them to develop programs that work as smoothly with the Windows operating system as Microsoft's own software does" breached Microsoft's intellectual property rights.

Claims of innovation
Microsoft is famous for its repeated claim to "innovation", which is the notion that Microsoft (and in some press releases and public statements, only Microsoft) is a company whose core business relies entirely on internal research and development.

In reality Microsoft have been responsible for very few innovations, usually buying in the technology. In-house developments like Windows itself - initiated at Gates behest to put "a Mac onto a PC", or Object Linking and Embedding have usually been unimpressive, and their development troublesome to the corporation.

Examples of Microsoft "innovations" include:
 * Microsoft's original MS-DOS, which secured its hold in the computer market, was made by buying the rights to a hack called QDOS, the "quick and dirty operating system". QDOS was written in six weeks and intended to be only as different from the major operating system it was based on as was necessary to avoid copyright infringement.
 * Microsoft's Excel copied its design from Lotus 1-2-3. Microsoft Access was a direct ripoff of dBASE. Microsoft Word was originally based on Apple's LisaWrite, and the GUI and macro features took hints from Lotus Ami Pro.
 * Microsoft purchased a small company that created the original PowerPoint.
 * Windows itself is derived in large part from the work at XEROX PARC and the Apple Macintosh.
 * Internet Explorer, which is based on Spyglass's Mosaic browser.
 * Disk compression, which was illegally stolen from Stac Electronics' Stacker. Microsoft was ordered to pay $120 million for patent infringement, but by then Stac had already gone under.

Embrace and extend
Another phrase -- "embrace and extend" -- has been used by Microsoft as well to describe its involvement in technologies it is not directly responsible for (which is to say, the majority). "Embrace and extend" has been used by critics to illustrate a Microsoft business model used to deal with a technology that threatens to become an adopted standard in what they regard as key business areas. The idea is to produce a compliant version of the technology, then add non-standard extensions so that products made to the Microsoft standard can no longer work with components made to the real standard. This then damages the reputation of genuinely standards-compliant producers and directly costs them money doing tech support.

Business strategies
Examples of other Microsoft business strategies include:
 * Microsoft issued a prerelease development kit for its OLE technology to its competitors. When they actually released OLE, they purposefully modified it so that it would crash the competitors' software that had used the development kit.
 * Microsoft bundled a bunch of its products together to create an "office suite", then sold it in a package, thus crushing its competitors who were all making individual products. This strategy was later used against Netscape.

Anti-anti-trust PR
In April 1998 the Los Angeles Times revealed that the public relations firm Edelman had drafted a campaign plan to ensure that a dozen state attorney-generals did not join anti-trust legal actions against Microsoft. Documents obtained by the LA Times revealed that the plan included generating supportive letters to the editor, opinion pieces and articles by freelance writers. 

According to the documents a goal of the campaign was to counter "negative, reactive coverage that is driven by state attorneys general". According to the documents the press clippings that would be generated were described as "leveragable tools for the company's state-based lobbyists" for use by state-based political consultants in their lobbying. The supportive clippings were intended to complement other materials - such as consumer surveys and economic studies - supporting Microsoft's contributions to regional economies.

According to the documents, Edelman - which boasts on its website that it was the PR company that pioneered litigation PR - planned to time one phase of stories to "coincide with April 21 oral arguments before U.S. Circuit Court of Appeals on Microsoft motion to disqualify Lawrence Lessig as special master in Microsoft antitrust case".

The internal documents identified Rory Davenport, Edelman's director of "grass-roots and political programs" in Washington and Neal Flieger as having been involved in the preparation of the strategy and scheduled to appear at a meeting to co-ordinate the implementation of the plan. When contacted by the LA Times, Davenport stated only that "there is no agreement for a campaign like that" while Fleiger said "I'm not prepared to amplify on that at all."

Lobbying for dead people
On August 23, 2001, the Los Angeles Times reported, "Letters purportedly written by at least two dead people landed on the desk of Utah Atty. Gen. Mark Shurtleff earlier this year, imploring him to go easy on Microsoft Corp. for its conduct as a monopoly. The pleas, along with about 400 others from Utah citizens, are part of a carefully orchestrated nationwide campaign to create the impression of a surging grass-roots movement." ("Another letter came from 'Tuscon, Utah,' a city that doesn't exist," noted the Times.)

The letter drive was carried out by two Microsoft-funded front groups, called Americans for Technology Leadership (ATL) and Citizens Against Government Waste. According to the Los Angeles Times article, "To assist it in the grass-roots campaign, Microsoft turned to two of the nation's top political advocacy groups: Boston-based Dewey Square Group, co-founded by Al Gore campaigner Michael Whouley, and Phoenix-based DCI/New Media, led by Republican strategist Tom Synhorst."

Even some actual residents asked to send letters as part of the pro-Microsoft campaign said they were misled: "Some residents who fielded ATL's calls believed the states themselves were soliciting their views, according to the attorneys general of Minnesota, Illinois and Utah. When a caller started asking Minnesotan Nancy Brown questions about Microsoft, she thought she was going to get help figuring out what was wrong with her computer," reported the Los Angeles Times. When told about the Microsoft-funded campaign, one Minnesota resident who sent a form letter to the state's attorney general told him, "I sure was misled."

National Security Agency builds access into Windows
In 1999 investigative journalist Duncan Campbell revealed that: "A careless mistake by Microsoft programmers has shown that special access codes for use by the U.S. National Security Agency (NSA) have been secretly built into all versions of the Windows operating system." 

More recently in 2007, William Blum noted that "In February 2000, it was disclosed that the Strategic Affairs Delegation (DAS), the intelligence arm of the French Defense Ministry, had prepared a report in 1999 which also asserted that NSA had helped to install secret programs in Microsoft software. According to the DAS report, "it would seem that the creation of Microsoft was largely supported, not least financially, by the NSA, and that IBM was made to accept the [Microsoft] MS-DOS operating system by the same administration." The report stated that there had been a "strong suspicion of a lack of security fed by insistent rumours about the existence of spy programmes on Microsoft, and by the presence of NSA personnel in Bill Gates' development teams." Microsoft categorically denied all the charges and the French Defense Ministry said that it did not necessarily stand by the report, which was written by "outside experts".

"... the DAS report states that the Pentagon at the time was Microsoft's biggest client in the world. The Israeli military has also been an important client. In 2002, the company erected enormous billboards in Israel which bore the Microsoft logo under the text "From the depth of our heart -- thanks to The Israeli Defense Forces", with the Israeli national flag in the background." 

Fighting open source
In 2000 the Washington Post reported that in May the year before Microsoft Corp. committed $380,000 to Citizens for a Sound Economy's tax-exempt foundation last May. Subsequently "CSE officials lobbied in Congress to limit the Justice Department's budget for antitrust enforcement. CSE officials say their opposition to Justice's antitrust suit against Microsoft long predated the company's contribution," The Washington Post reported.  Over the past three years, Microsoft has funded nearly a dozen think tanks that have released papers attacking open-source software in hopes of slowing its success.

The company seems to have borrowed a page from big tobacco in these attacks. According to Tim Lambert of LinuxWorld.com, some of the same think tanks received funding from Philip Morris to wage attacks on the credibility of the Food and Drug Administration in 1995, to prevent the regulation of nicotine in cigarettes.  In June 2004, just as it was becoming clear that the known Microsoft-funded attack of SCO against the legal safety of Linux has no merit at all, the Alexis de Tocqueville Institution, a Washington, D.C. think tank started to claim that Linus Torvalds could never have written Linux and concluding: "Since Linux is tainted, potential users may one day find themselves in court.."

A cuddly Microsoft?
"A humbler Microsoft" is "reinventing itself," Advertising Age wrote in November 2005. "It is enlisting young executives ... in a marketing-leadership program to help it overcome hurdles such as competition from free software; the challenge of competing against itself with new products; and getting consumers to trust the company once blames for security breaches." Microsoft's chief marketing officer, Steve Ballmer, was elevated so that he reports directly to the CEO. Microsoft also created a new organization, Marketing@Microsoft, with a training program offering "peer and career mentors" that draws 70 to 80 recent graduates a year. Each year, "the top students get treated to a lunch with Mr. Ballmer." Lastly, Microsoft has begun conducting "consumer research before programmers hit the keyboards." (Reference is listed below but not online).

But not for bloggers
Microsoft shut down "a popular Chinese-language blog" by journalist Zhao Jing on December 30, on the grounds that it "has run edgy content potentially offensive to Chinese authorities." The blog "had criticized the government's firing of top editors at a progressive Beijing newspaper." Microsoft stated, "Most countries have laws and practices that require companies providing online services to make the internet safe for local users. ... In China, local laws and practices require consideration of unique elements." Mr. Zhao's earlier blog, hosted by the Scottish company Blog-City, was also blocked for writing about another newspaper. The Chinese government requires bloggers to register and prohibits online postings that are "against state security and public interest." Last year, Yahoo helped identify another Chinese journalist now serving a 10-year prison sentence for emailing a secret government order; Cisco Systems has sold web filter programs to Chinese authorities.

Political contributions
Microsoft gave $832,100 to federal candidates in the 05/06 election cycle through its political action committee (PAC) - 41% to Democrats and 58% to Republicans. $4,000 went to independent Joseph Lieberman (I-CT).

John Kelly, a lobbyist working at Microsoft, is a Bush Pioneer having raised at least $100,000 for Bush in the 2004 presidential election. Texans for Public Justice has this to say about him: "John Kelly is a Microsoft attorney who helped devise the company's slow-starting but ultimately aggressive lobby strategy. At the time of George Bush’s 2000 election, Microsoft was fighting a massive federal antitrust lawsuit, joined by 18 states, which accused the company of ruthlessly monopolizing the market for personal computer operating systems. In an email disclosed in a Minnesota antitrust case, one company executive likened Windows to a “toll bridge” that collected $45 on every personal computer sold. As part of its defense, Microsoft spent $6 million on lobbyists in 2000 ..., as it and its employees made $4.7 million in federal contributions. More than two-thirds of this contribution money went to Republicans ..., according to the Center for Responsive Politics. Among other tactics, Microsoft lobbyists pushed Congress to cut the Justice Department's budget. ... A U.S. appeals court ruled in 2001 that Microsoft illegally wielded the monopolistic power of its Windows operating system to crush rivals. Yet the settlement that the Bush administration reached with Microsoft that year imposed only minor restrictions on the company’s business practices. Bush’s Justice Department acknowledged as much in early 2004, when it told a federal judge that its settlement agreement was unlikely to spur significant competition in the marketplace. In a tougher antitrust ruling in 2004, the European Commission slapped Microsoft with a $613 million fine and demanded significant reforms in its business practices."

Lobbying
Microsoft spent $8,880,000 for lobbying in 2006. $4,190,000 was to 19 different lobbying firms with the remainder being spent using in-house lobbyists. Some lobbying firms used were Covington & Burling, Clark & Weinstock, Ernst & Young, and Quinn Gillespie & Associates.

Personnel
Key people:
 * Bill Gates, Chairman
 * Steve Ballmer, CEO and Director
 * B. Kevin Turner, Chief Operating Officer

Labor
Lite-On Xuji Electronics Co., Ltd. Is a keyboard manufacturer based in Dongguan, China. The factory was founded in 1995, and while Dell is its major buyer, Lite-On Xuji sells keyboards to Acer, Apple, Foxconn, Gateway, HP, IBM, Lenovo, Logitech, Microsoft, NEC, Sony, and Toshiba. According to a 2008 report conducted by SACOM and Bread for All, the factory employed 3000 workers who work between 10 and 12 hours a day. The factory began paying workers legal wages and overtime wages in 2008, while they had been paying illegally low wages in 2006 and 2007. However, workers continue to work more than 100 overtime hours per month, well about the legal limit of 36 overtime hours monthly. Due to long hours standing, repetitive tasks, and high work speed, workers suffer from swollen legs, back pain, and other repetitive motion injuries, as well as irritation from paint and paint thinner fumes. Despite these problems, Xuji factory has no program in place to “identify, evaluate, and control the hazards that arise from physically demanding work.” Management threatens workers who make mistakes with the possibility of the withdrawal of factory client orders. Worker dormitories are very crowded and noisy, housing 16 workers per room, who must share all facilities in common and often have trouble sleeping due to noise. While workers were not aware of their labor rights under the EICC, they still “expressed the urgent need” for safety training as well as shortened standing work hours or at least longer breaks and rest periods.

Directors
Accessed December 2007:
 * Steve Ballmer - Chief Executive Officer
 * James I. Cash, Jr. - Former James E. Robison Professor, Harvard Business School
 * Dina Dublon - Former Chief Financial Officer, JPMorgan Chase
 * Bill Gates - Chairman
 * Raymond V. Gilmartin - Former Chairman, President and Chief Executive Officer, Merck & Co., Inc.
 * Reed Hastings - Founder, Chairman and CEO, Netflix, Inc.
 * David F. Marquardt - General Partner, August Capital
 * Charles H. Noski - Former Vice Chairman, AT&T Corporation
 * Helmut Panke - Former Chairman of the Board of Management, BMW AG
 * Jon A. Shirley - Former President and Chief Operating Officer, Microsoft Corporation

Affiliations

 * Business Software Association
 * European Information & Communications Technology Industry Association
 * Computing Technology Industry Association

Public relations firms

 * APCO Worldwide
 * Burson-Marsteller
 * G Plus
 * Weber Shandwick

Media companies

 * MSNBC
 * Slate magazine
 * Tech Central Station

Contact details
1 Microsoft Way Redmond, WA 98052 Phone: 425-882-8080 Fax: 425-936-7329 Web: http://www.microsoft.com

Related SourceWatch articles

 * Intellectual property
 * Jose Pinero
 * Maria S. Eitel
 * Pamela S. Passman
 * Pete Higgins
 * Peter Neupert

External resources

 * Microsoft News "Microsoft News Updates," Microsoft News.

External articles

 * Greg Miller and Leslie Helm, "Microsoft Plans Stealth Media Blitz; Publicity: Campaign to conjure image of public support called just a proposal by firm", The Los Angeles Times, April 10, 1998, pages 1 and 8. A copy of the story has been posted to
 * Duncan Campbell, "NSA Builds Security Access Into Windows", TechWeb, September 3, 1999.
 * John M. Broder and Joel Brinkley, "U.S. versus Microsoft: The strategy: How Microsoft Sought Friends In Washington", New York Times, November 7, 1999.
 * David Callahan, "The Think Tank As Flack, How Microsoft and other corporations use conservative policy groups", Washington Monthly, November 1999.
 * Dan Morgan, "Think Tanks: Corporations' Quiet Weapon", Washington Post, January 29, 2000.
 * Holly Bailey, "Microsoft Antitrust Case: An Update on the Company's Lobbying and Campaign Contributions", Opensecrets.org News Alert, Volume 6, Number 26, September 6, 2001.
 * Tim Lambert, "When Think Tanks Attack, Think tanks vs Open Source", Deltoid, June 23, 2004
 * Jeff Reifman, "Citizen Microsoft", Seattle Weekly, September 29 - October 5, 2004:"It's time we stopped acquiescing to the behemoth in Redmond, because what's good for big business isn't necessarily good for Washington." (Excellent story about Microsoft's use of think tanks, tax exceptions and tax havens to give Washington state as little money tax as possible).
 * Carl Bialik, "When Considering Surveys On Business, Follow the Money," Wall Street Journal (reg. req'd.), March 31, 2005. "The worst example of commissioned research I took a look at came from Microsoft Corp. ... Among the problems: the company that conducted the survey for Microsoft, InsightExpress, initially screened respondents to ask if they spent at least four hours a day at the computer. It's thus not surprising, nor particularly informative, that two-thirds of those who said yes also spend more than six hours a day at the computer. As for Microsoft being named most often, the other choices weren't household names: Kensington, Logitech and Belken. Had the question been flipped to ask which company was least associated with reliable, high-quality hardware peripherals, Microsoft might well have won that one, too."
 * Reporters Without Borders, "Microsoft censors its blog tool", Media Release, 14 June 2005.
 * Jonathan Watts, "Microsoft helps China to censor bloggers", Guardian (UK), June 15, 2005.
 * Alice Z. Cuneo, "To Shed 'Evil-Empire' Tag, Microsoft Remakes Itself: Software giant retools marketing to reach out to consumers, young talent," Advertising Age, November 7, 2005, p. 18 (not available online).
 * Kathy Chen and Geoffrey A. Fowler, "Microsoft Defends Censoring a Dissident's Blog in China", Wall Street Journal, January 6, 2006.
 * Bruce Einhorn, "How China Controls the Internet: Nicholas Bequelin of Human Rights Watch in Hong Kong explains, and he says U.S. companies need to take a stand against Beijing," BusinessWeek, January 13, 2006.
 * Tom Zeller Jr., "China, Still Winning Against the Web," New York Times, January 15, 2006.
 * Stephen Labaton, "Microsoft Finds Legal Defender in Justice Dept.," New York Times, June 10, 2007.
 * Press release, "Microsoft Inspires U.S. Hispanics to Live the Vida Digital Latina," Microsoft via WebWire, April 30, 2008.
 * Glen Dickson, "Microsoft Presses for White Spaces Vote: Microsoft's Craig Mundie tells reporters 'no justifiable reason' to delay FCC vote on proposed devices," Broadcasting & Cable, October 27, 2008.